Frequently Asked Questions About Business Litigation

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Frequently Asked Questions About Business Litigation

Q: What is involved when litigating a business issue?

A: This depends on the issue. The business owner would follow the same process for business litigation as he or she would for any civil lawsuit, including usually obtaining an attorney, pretrial matters such as motions, possible settlement negotiations, trial and possibly appeal.

Q: What are some alternatives to litigation?

A: Businesses often use Alternative Dispute Resolution (ADR) methods. The ADR process usually utilizes arbitration or mediation. These alternatives are attractive because they are often less expensive and more efficient than traditional litigation.

Q: What is the difference between mediation and arbitration?

A: Mediation is a cooperative process and uses a neutral third party (a mediator) to facilitate consensus building and discussion, in order to reach a mutually satisfactory resolution. Arbitration also employs a neutral third party (an arbitrator), who listens to both sides and makes a decision, which is usually binding.

Q: Is the result of mediation or arbitration binding?

A: The judgment in arbitration is usually binding on the parties. Often the parties decide prior to the arbitration proceeding that the findings of the arbitrator will be final and legally binding. This agreement is usually formalized by a contract signed by all parties involved. Much less commonly, parties may agree to nonbinding arbitration, viewed as a negotiation technique. Mediation is not binding and the parties, if dissatisfied with the result, can move on to a courtroom proceeding.

Q: Can results from mediation or arbitration be appealed?

A: Because the result of mediation is nonbinding, the parties can still bring their issues before a judge, although this is not technically an appeal. In the case of binding arbitration, an appeals process may take place if the parties have agreed, before the arbitration begins, to allow one. Generally, the decision of the arbitrator is final and the appellate process is not available.

Q: What is a class-action lawsuit?

A: A class action is a judicial proceeding where usually one or two named plaintiffs represent a much larger group of plaintiffs. Often, the issue is one where there has been an injury to a large enough group of people that individual litigation would be inefficient.

Q: Can business entities participate in a class action?

A: Yes. If a business entity has an injury in common with a greater group of plaintiffs that have formed a class, then the business may qualify as a class member.

Q: What is the legal fee arrangement for a class action?

A: Lawyers are normally paid on a contingency-fee basis in class actions. This means that the lawyer only collects a legal fee if a positive judgment for the plaintiffs is reached. Due to the high costs of class-action lawsuits, generally contingency-fee arrangements are the best option.

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